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EXHIBIT 10.69
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is effective as of the 11th day of December,
1996, by and among MPILEX Partners, L.P., a Delaware limited partnership
("NEWCO"), having an address at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, ▇.▇.▇. and ILEX Oncology Inc. ("ILEX"), formerly known as Biovensa
Inc., having an address at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
U.S.A.
WHEREAS, ILEX entered an agreement (the "B.W. Agreement") with
▇▇▇▇▇▇▇▇▇ Wellcome Co. (now known as Glaxo Wellcome Inc.) ("B.W. Co.") and the
Wellcome Foundation Limited ("WFL"), pursuant to which ILEX was granted a
license, with the right to sublicense, to certain worldwide rights to make,
use, and sell piritrexim isethionate, also known as 2, 4--diamino--6 (2,
5--dimethoxybenzyl)--5--methylpyrido--(2, 3--D) pyrimidine, in all forms and
formulations; and
WHEREAS, NEWCO is interested in obtaining an exclusive sublicense of
ILEX's worldwide rights to such Patent Rights and Know-How to use and sell the
Compound and Products containing the Compound; and
WHEREAS, ILEX is willing to grant such license to NEWCO;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto mutually agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or the plural, shall have the following meanings:
1.1 "Affiliate" means any corporation or entity which controls, is
controlled by, or is under common control with ILEX or NEWCO. A corporation or
entity shall be regarded as in control of another corporation if it owns or
directly or indirectly controls at least [**] of the voting
stock of the other corporation, or (i) in the absence of the ownership of at
least [**] of the voting stock of a corporation or (ii) in the
case of a non-corporate entity, if it possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation or non-corporate entity, as applicable.
1.2 "Agreement" means this License Agreement.
1.3 "Approval Date" means the calendar date upon which necessary
government authorities in a country issue final approval legally required
before a Product may be commercialized in such country.
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1.4 "Base Currency" means (i) Dollars, with respect to sales of
Products in the U.S. and royalties payable to ILEX thereon; and (ii) Sterling,
with respect to sales of Products in the Non-U.S. Territory and royalties
payable to ILEX thereon.
1.5 "B.W. Agreement" means the License Agreement entered into by
▇▇▇▇▇▇▇▇▇ Wellcome Co., the Wellcome Foundation Limited, and ILEX effective as
of the Operative Date. A copy of the B.W. Agreement is attached hereto as
Exhibit "I" and made a part hereof.
1.6 "Compound" means the chemical known as piritrexim isethionate,
having the chemical structure set forth on Appendix II attached hereto and made
a part hereof.
1.7 "Cost of Manufacturing" means the actual cost incurred by ILEX
in the manufacture of formulated Compound, including all packaging,
transportation and handling charges, excise, use, and sales taxes, or any
import/export duties actually paid.
1.8 "Dollars" or "$" means United States dollars.
1.9 "Effective Date" means the date appearing at the beginning of
this Agreement.
1.10 "Europe" means all countries which are Member States, from
time to time, of the European Economic Area.
1.11 "FDA" means the United States Food and Drug Administration or
any successor entity.
1.12 "Field" means the treatment or prophylaxis of cancer in humans
and conditions other than cancer which are associated with cancer or the
treatment or prophylaxis of cancer in humans.
1.13 "First Commercial Sale" means the date on which NEWCO or a
sublicensee first transfers title to a Product to a Third Party for monetary
consideration.
1.14 "ILEX's License Rights" means the license rights B.W. Co. and
WFL granted ILEX in the B.W. Agreement.
1.15 "IND" means an Investigational New Drug application or any
equivalent successor application.
1.16 "Know-How" means all inventions, technical data, techniques,
knowledge, and other information, whether or not patented or patentable, that
are (i) reasonably necessary to manufacture a Product or to use the Compound in
the Field, including all regulatory filings, clinical trial data, synthesis
and analytic procedures and reference standards, and (ii) owned by ILEX or
licensed to ILEX under the B.W. Agreement.
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1.17 "Major European Country" shall mean any of Great Britain,
France, Germany, Italy, Spain, or the Netherlands.
1.18 "NDA" means a New Drug Application or any equivalent successor
application.
1.19 "Net Sales," with respect to any Product containing the
Compound as the sole active ingredient, means the gross sales (i.e., gross
invoice prices) of such Product billed by NEWCO and its sublicensees to Third
Party customers, less: (i) actual credited allowances to such Third Party
customers for spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price increases; (ii) the
amounts of customary trade and cash discounts, to the extent such trade and
cash discounts are not deducted by NEWCO or its sublicensees at the time of
invoice in order to arrive at the gross invoice prices; (iii) all
transportation and handling charges, sales taxes, excise taxes, use taxes,
value added taxes, other similar taxes, or import/export duties actually paid;
and (iv) all other invoiced allowances and adjustments actually credited to
customers including, but not limited to, rebates paid to Third Party payors,
whether during the specific royalty period, as defined in Section 5.1, or not.
1.20 "Net Sales," with respect to any Product containing one or
more active ingredients in addition to the Compound, means the gross sales of
such Product billed by NEWCO and its sublicensees to Third Party customers,
less all the allowances, adjustments, discounts, taxes, duties and other
charges referred to in clauses (i) through (iv) of Section 1.18, multiplied by
a fraction, the numerator of which shall be the manufacturing cost or
acquisition cost, as applicable, of the Compound included in such Product and
the denominator of which shall be the manufacturing cost or acquisition cost,
as applicable, of all active ingredients in such Product, including the
Compound. These costs shall be computed using the standard cost accounting
procedures of ILEX in accordance with generally accepted accounting principles
(i.e., GAAP).
1.21 "Operative Date" means the 31st day of March, 1995, the date
which the B.W. Agreement became effective.
1.22 "Patent Rights" means, collectively, the B.W. Co. Patent
Rights and the WFL Patent Rights licensed to ILEX under the B.W. Agreement as
more fully described in Exhibit "I" attached hereto and made a part hereof.
1.23 "Product" means the Compound or any product containing the
Compound as an active ingredient, which is (i) covered by a Valid Claim or (ii)
made or developed using the Know-How.
1.24 "Registration" means in relation to any Product such approvals
by government authorities in a country (including price approvals) as may be
legally required before such Product may be commercialized in such country.
1.25 "Sterling" or "L" means English Pounds Sterling.
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1.26 "Submittal Date" means the calendar date upon which NEWCO
forwards, whether by mail, facsimile, electronically, carrier, or otherwise, a
Registration dossier or NDA to appropriate government authorities.
1.27 "Technology" means the Patent Rights together with all
Know-How related or pertaining to the Field.
1.28 "Territory" means the U.S. and Non-U.S. Territory.
1.29 "Non-U.S. Territory" means the entire world excluding the
U.S.
1.30 "Third Party" means any party other than MPI Enterprises,
L.L.C. ("MPI"), ILEX, NEWCO, ILEX's and NEWCO's respective Affiliates, and
NEWCO's sublicensees.
1.31 "U.S." means the United States of America, its territories and
possessions.
1.32 "Valid Claim" means a claim of an issued and unexpired patent
included within the Patent Rights which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.
ARTICLE 2. REPRESENTATIONS & WARRANTIES
Each party hereto represents and warrants to the other that it is free
to enter into this Agreement and to carry out its obligations hereunder,
including, in the case of ILEX, the right to grant the license granted by it
pursuant to Article 3 hereof. Except as set forth in this Article 2, ILEX
makes no representations or warranties with respect to the Patent Rights or the
Know-How.
ARTICLE 3. GRANT
3.1 License Grant. Subject to the provisions of Section 3.2 and 3.3
in respect of the exclusive sublicense granted in this Section 3.1, and B.W.
Co.'s and WFL's reservation of rights set forth in Section 3.3 of the B.W.
Agreement, and any other limitation upon ILEX's License Rights set forth in the
B.W. Agreement, ILEX hereby grants to NEWCO, under the Patent Rights and
Know-How, an exclusive sublicense in the Territory in the Field with a right to
sublicense, to make, have made, use and sell Products.
3.2 Reservation of Rights. ILEX hereby reserves the perpetual,
royalty-free right to practice the Patent Rights and to use the Know-How for
research purposes.
3.3 Manufacturing and Marketing Rights. ILEX hereby reserves the
rights set forth in Sections 8.3 and Article 9.
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ARTICLE 4. LICENSE FEE AND MILESTONE PAYMENTS
4.1 License Fee. As partial consideration for the licenses
granted hereunder, NEWCO will pay ILEX a total sum of One Million Five Hundred
Thousand Dollars ($1,500,000) upon Effective Date.
4.2 Milestone Payments. As partial consideration for the licenses
granted hereunder, and subject to fulfillment of preconditions to payment
referred to in this Section 4.2, NEWCO will pay ILEX the following sums:
(i) [**] within ten (10)
days of the Submittal Date of the first NDA in the
United States;
(ii) [**] within ten
(10) days of the Submittal Date of the first
Registration dossier in a Major European Country;
(iii) [**] within ten
(10) days of the Submittal Date of the first
Registration in Japan;
(iv)
[**] within ten (10) days of the Approval
Date of the first Approval of the NDA in the United
States;
(v)
[**] within ten (10) days of the Approval
Date of the first Registration dossier by a Major
European Country;
(vi) [**] within ten (10)
days of the Approval Date of the first Registration
dossier in Japan.
4.3 Payment. Payment of each installment of the License Fee and
Milestone Payment shall be made in Dollars directly to ILEX.
ARTICLE 5. ROYALTIES
5.1 Earned Royalties. Subject to adjustment as set forth in
Section 5, NEWCO shall pay ILEX a royalty on Net Sales of Products in (i) the
U.S. and in (ii) the Non-U.S. Territory at the royalty rate of [**]
on Net Sales of Products in the respective Territories in a calendar
year, except as provided below.
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Royalties shall be paid in respect of Net Sales of Products in a given
country of the Territory for a period of ten (10) years from the date of First
Commercial Sale of the first Product in such country. Thereafter, royalties
shall be paid in respect of a given Product only so long as the manufacture,
sale or use of such Product in such country would, but for the license granted
herein, infringe a Valid Claim. With respect to countries where all Valid
Claims expire before the 10-year period, the royalty rate on Net Sales of
Products shall be reduced to [**] for the remainder of the
10-year period. Notwithstanding the foregoing, however, with respect to Europe
only, royalties on Net Sales of a given Product which are payable only by
virtue of clause (ii) of Section 1.22 shall be payable on a country-by-country
basis commencing with the first commercial sale of such Product in such country
and ending on the earlier of (x) the date on which the Know-How used to make
and develop such Product becomes published or generally known to the public
through no fault on the part of NEWCO or its Affiliates or sublicensees or (y)
the eighth (8th) anniversary of the commercial sale of the first Product in
such country.
5.2 Payment to B.W. Co. and WFL. ILEX hereby undertakes and
agrees to transfer the applicable royalty payments to B.W. Co. and WFL, in
accordance with the B.W. Agreement. ILEX shall indemnify and hold NEWCO, its
Affiliates, directors, officers, employees and agents harmless from and against
any liabilities for ILEX's breach of this Section 5.2 and NEWCO shall have the
right to set off future royalties due ILEX pursuant to Section 5.1 by the
amount of such liability.
5.3 Third Party Sales.
(i) With respect to any country in which Patent Rights do not
exist, if (a) a product containing the Compound as an active ingredient for use
in the Field is introduced by a Third Party (a "Competitive Product") and (b)
sales by such Third Party exceed the applicable percentage set forth below of
unit sales of NEWCO and its sublicensees of Products in such country in any
calendar quarter, then the royalty rates specified in Sections 5.1 applicable
to sales by NEWCO and its sublicensees of Products in such country during such
calendar quarter shall be adjusted as set forth below:
% Third Party Unit Sales ("X") %
------------------------------ --
Reduction in Section 5.1 Royalty Rates
--------------------------------------
X less than or equal to [**] [**]
[**] less than X less than [**] [**]
X greater than or equal to [**] [**]
By way of example only, if in a given calendar quarter a Third Party's unit
sales of a Competitive Product in a country were [**] of
the unit sales by NEWCO and its sublicensees of Products in such country for
the same calendar quarter, the royalty rates applicable to such sales by NEWCO
and its sublicensees during such calendar quarter would be [**]
.
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(ii) For purposes of this Section 5.3, Third Party unit sales shall
be measured by the sales reported by IMS America Ltd. of Plymouth Meeting,
Pennsylvania and its affiliates ("IMS") or another independent marketing firm
selected and paid by NEWCO and reasonably acceptable to ILEX. NEWCO shall
furnish to ILEX copies of reports of IMS or such other auditing firm for the
relevant calendar quarter(s), together with NEWCO's royalty reports and NEWCO's
royalty payments for the relevant quarters.
5.4 Accrual of Royalties. No royalty shall be payable on a
Product made, sold, or used for tests or development purposes or distributed as
samples. No royalties shall be payable on sales among NEWCO and NEWCO's
sublicensees, but royalties shall be payable on the initial subsequent sale by
NEWCO or its sublicensees to a Third Party. No multiple royalty shall be
payable because the manufacture, use or sale of a Product is covered by more
than one Valid Claim or is subject to both Know-How and a Valid Claim.
5.5 Third Party Royalties. If (i) NEWCO or its sublicensees and
(ii) ILEX agree that NEWCO or its sublicensees are required to pay royalties to
any Third Party because the manufacture, use or sale of a Compound contained in
a given Product infringes any patent or other intellectual property rights of
such Third Party in a given country, NEWCO or its sublicensees may deduct equal
amounts from royalties thereafter due to ILEX pursuant to paragraph 5.1 with
respect to Net Sales of such Product in such country up to [**]
of the royalties or such other fees paid to such Third Party, subject to the
limitation in the immediately following sentence. In no event shall the
royalties due to ILEX, pursuant to Paragraph 5.1, on such Net Sales of such
Product in such country on account of any reduction pursuant to this Section
5.5 be thereby reduced by more than [**] of the royalties
which otherwise would have been due hereunder on such Net Sales of such Product
in such country.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1 Royalty Reports; Records. During the term of this Agreement,
NEWCO shall furnish to ILEX, in respect of Net Sales of Products in the U.S.
and in respect of Net Sales of Products in the Non-U.S. Territory, a written
report or reports covering each calendar quarter (a "Royalty Period") showing
(i) the Net Sales of all Products in the U.S. or the Non-U.S. Territory, as
applicable, during the Royalty Period; (ii) the royalties, payable in the Base
Currency, which shall have accrued hereunder in respect of such sales; (iii)
withholding taxes, if any, required by law to be deducted in respect of such
sales; and (iv) the exchange rates used in determining the amount of the
royalties payable in the Base Currency. With respect to sales of Products
invoiced in the Base Currency, the Net Sales and royalty payable shall be
expressed in such Base Currency. With respect to sales of Products invoiced in
a currency other than the Base Currency, the Net Sales and royalty payable
shall be expressed in the domestic currency of the party making the sale
together with the Base Currency equivalent of the royalty payable, calculated
using the simple average of the exchange rates published in the London
Financial Times under the heading "World Value of the Pound" on the last day of
each month during the Royalty Period in which the London Financial Times' Guide
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is published (currently Tuesdays). If any sublicensee makes any sales invoiced
in a currency other than its domestic currency, the Net Sales shall be
converted to its domestic currency in accordance with the sublicensee's normal
accounting principles. NEWCO shall furnish to ILEX appropriate evidence of
payment of any tax or other amount required by applicable laws or regulations
to be deducted from any royalty payment. Reports shall be due on the
forty-fifth (45th) day following the close of each respective calendar quarter.
NEWCO shall keep accurate records in sufficient detail to enable the royalties
payable hereunder to be determined. NEWCO shall be responsible for all
royalties and late payments that are due to ILEX but have not been paid by
NEWCO's sublicensees to NEWCO
6.2 Right to Audit. Upon the written request of B.W. Co. or WFL
or ILEX (the "Auditing Party"), at its expense and not more than once in each
calendar year (i.e., once for B.W. Co. and once for WFL and once for ILEX),
NEWCO shall permit an independent public accountant, selected by the Auditing
Party, and acceptable to NEWCO (the "Auditor"), which acceptance shall not be
unreasonably refused, to have access during normal business hours to those
records of NEWCO as may be reasonably necessary to verify the accuracy of the
royalty reports furnished by NEWCO pursuant to Section 6.1 of this Agreement in
respect of any calendar year ending not more than forty-eight (48) months prior
to the date of such request. NEWCO shall include in each sublicense granted by
it pursuant to this Agreement a provision requiring the sublicensee to keep and
maintain records of sales made pursuant to such sublicense and to grant access
to such records by the Auditor. If the Auditor's report shows any underpayment
of royalties, within twenty five (25) days after NEWCO's receipt of such
report, NEWCO shall remit to ILEX (i) the amount of such underpayment and (ii)
if such underpayment exceeds [**] of the total royalties owed to
the Auditing Party for the calendar year then being audited, the reasonable and
necessary fees and expenses of the Auditor, subject to reasonable
substantiation thereof. Any overpayment of royalties shall be fully creditable
against future royalties payable to the Auditing Party in subsequent Royalty
Periods.
6.3 Confidentiality of Records. The Auditing Party agrees that
all information subject to review under this Article 6 or under any sublicense
agreement is confidential and that it and its accountant shall retain all such
information in confidence in accordance with the provisions of Article 13
hereof. At NEWCO's request, the Auditor shall execute a confidentiality
agreement with respect to the information subject to review under this Article
6.
ARTICLE 7. ROYALTY AND OTHER PAYMENTS
7.1 Royalty Payment Due Dates. Royalties shown to have accrued in
each royalty report provided for under Article 6 of this Agreement shall be due
and payable on the date such royalty report is due. Payment of royalties in
whole or in part may be made in advance of such due date.
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7.2 Currency Restrictions. Except as hereinafter provided in this
Section 7.2, all royalties due shall be paid in the Base Currency. If at any
time legal restrictions prevent the prompt remittance of part or all royalties
with respect to any country of the Territory where the Products are sold, NEWCO
shall have the right and option to make such payments by depositing the amount
thereof in local currency to ILEX's account in a bank or depository in such
country.
7.3 Interest. Royalties, Milestone, and other payments required
to be paid by NEWCO pursuant to this Agreement shall, if overdue, bear interest
at a per annum rate of [**] or the maximum rate allowed by
law, whichever is less, until paid. The payment of such interest shall not
preclude ILEX from exercising any other rights it may have because any payment
is overdue.
ARTICLE 8. DEVELOPMENT AND MARKETING PROGRAM
8.1 Development Plan. NEWCO shall prepare a development program
and budget (the "Development Plan") to conduct clinical studies and such other
work as is necessary to file for and obtain marketing approval of the Compound,
for one or more indications, in the United States, Europe, and Japan. NEWCO
shall exercise its best efforts to formulate the Development Plan in the
shortest time possible.
8.2 Oversight of Development Plan. ILEX and NEWCO agree that
NEWCO shall oversee the Development Plan. On an annual basis, NEWCO shall
review, modify, and adjust the Development Plan as appropriate. NEWCO shall
undertake and comply with ILEX's obligations set forth in Sections 8.1, 8.2,
and 8.3 of the B.W. Agreement.
8.3 Commercialization Plan. ILEX will have a right of first
refusal to market the Products in the countries for which approval to market
has been obtained, provided that ILEX reasonably demonstrate that it has
reasonably competitive capabilities and pricing to accomplish such marketing.
8.4 Progress Reports. Until commercial introduction of the first
Product, NEWCO will provide a semiannual report to ILEX summarizing NEWCO's
activities related to the development of the Products and securing of the
requisite Registrations during the semiannual period covered by such report.
ARTICLE 9. MANUFACTURE AND SUPPLY
ILEX shall have the exclusive right, except to the extent that the
partners in NEWCO agree to have a back-up manufacturer, to supply formulated
Product to NEWCO and its sublicensees provided that ILEX can reasonably
demonstrate that it has reasonably competitive capabilities and can supply such
Product at reasonably competitive prices. The parties will use their
reasonable efforts to keep the cost of Product below [**] of Net
Sales.
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ARTICLE 10. PATENT RIGHTS
10.1 Patent Prosecution and Maintenance. The parties acknowledge
and agree that pursuant to the B.W. Agreement, B.W. Co. and WFL have primary
responsibility for preparation, filing, prosecution, and maintenance of Patent
Rights. Should at any time during the term of this Agreement, ILEX be given
the opportunity to prosecute any patent application or to maintain any Patent
Rights in any country in the Territory pursuant to Article 9.1 of the B.W.
Agreement, ILEX shall (i) use reasonable efforts to prosecute patent
applications within the Patent Rights, to obtain patents thereon and to
maintain any such patents during the term hereof using patent counsel of their
choice, or (ii) offer NEWCO the right to prosecute such patent application
and/or to maintain such patent at NEWCO's expense.
10.2 Patent Prosecution Costs. NEWCO shall reimburse ILEX for the
reasonable out-of-pocket expenses incurred in the performance of ILEX's, B.W.
Co.'s, or WFL's obligations pursuant to Section 10.1 and out-of-pocket expenses
ILEX incurred pursuant to section 9.3 of the B.W. Agreement. ILEX shall
invoice NEWCO for such expenses on or before April 30 and October 31 of each
year with respect to those out-of-pocket expenses ILEX has incurred for the six
(6) month period ending on the last day of the immediately preceding August or
February. Such invoice shall itemize, in reasonable detail, the expenses which
have been incurred on a country-by-country basis. Payment of each invoice
shall be due net twenty (20) days after its date.
ARTICLE 11. THIRD PARTY INFRINGEMENT
In the event that NEWCO becomes aware that a product containing the
Compound for use in the Field is being made, used or sold in the Territory and
it believes that such product infringes a Valid Claim, it shall promptly advise
ILEX of all the relevant facts and circumstances known by it in connection with
the infringement. In the event that (i) ILEX and B.W. Co. and WFL shall fail,
within ninety (90) days after ILEX receives notice from NEWCO, either (a) to
terminate such infringement or (b) to institute an action to prevent
continuation thereof and, thereafter, to prosecute such action diligently, or
(ii) ILEX earlier notifies NEWCO that ILEX and B.W. Co. and WFL do not plan to
terminate the infringement or institute such action, then NEWCO shall have the
right to do so at its own expense. ILEX shall cooperate with NEWCO in such
effort including being joined as a party to such action, if necessary. Any
damages or costs recovered in connection with any action filed by NEWCO
hereunder, after first reimbursing NEWCO for its out-of- pocket costs and
expenses of litigation, shall be deemed to be Net Sales of Products in the
calendar year actually received by NEWCO and royalties shall be payable by
NEWCO to ILEX thereon in accordance with the terms of this Agreement. Any
damages or costs recovered in connection with any action filed by ILEX
hereunder, after reimbursing ILEX for its out-of-pocket costs and expenses of
litigation and royalties due to either B.W. Co. or WFL, respectively, in
accordance with the B.W. Agreement shall be divided among ILEX and NEWCO on an
equal basis. Any damages or costs recovered in connection with any action
filed by B.W. Co. or WFL, respectively, in connection with any action filed by
it under Article 10 of the B.W. Agreement, after first reimbursing B.W. Co. or
WFL for its out-of-pocket
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costs and expenses of litigation, shall be divided by ILEX and NEWCO in equal
amounts of [**] .
ARTICLE 12. INDEMNIFICATION; INSURANCE
12.1 Indemnification by NEWCO. NEWCO agrees to indemnify and hold
ILEX, its Affiliates, directors, officers, employees and agents harmless from
and against any liabilities or damages or expenses in connection therewith
(including reasonable attorneys' fees and costs and other expenses of
litigation) resulting from (i) claims arising out of NEWCO's or its
sublicensees' testing, use, manufacture or sale of the Products; (ii) the
successful enforcement (i.e., a judgment issued by a court of competent
jurisdiction against NEWCO, unappealable or unappealed by NEWCO within the time
allowed therefor) by ILEX of its indemnification rights set forth in clause (i)
of this Section 12.1; or (iii) the successful enforcement (i.e., a judgment
issued by a court of competent jurisdiction against NEWCO, unappealable or
unappealed by NEWCO within the time allowed therefor) by either B.W. Co. or WFL
of a claim against ILEX that arises under the B.W. Agreement.
12.2 Indemnification Procedures. If ILEX (the "indemnitee")
intends to claim indemnification under this Article 12, ILEX shall promptly
notify NEWCO (the "indemnitor") in writing of any action, claim or liability in
respect of which the indemnitee or any of its Affiliates, directors, officers,
employees or agents intend to claim such indemnification. The indemnitee shall
permit, and shall cause its Affiliates, directors, officers, employees and
agents to permit, the indemnitor, at its discretion, to settle any such action,
claim or liability and agrees to the complete control of such defense or
settlement by the indemnitor; provided, however, that such settlement does not
adversely affect the indemnitee's rights hereunder or impose any obligations on
the indemnitee in addition to those set forth herein in order for it to
exercise such rights. No such action, claim or liability shall be settled
without the prior written consent of the indemnitor and the indemnitor shall
not be responsible for any legal fees or other costs incurred other than as
provided herein. The indemnitee and its Affiliates, directors, officers,
employees and agents shall cooperate fully with the indemnitor and its legal
representatives in the investigation and defense of any action, claim or
liability covered by this indemnification. The indemnitee shall have the
right, but not the obligation, to be represented by counsel of its own
selection and expense.
12.3 Insurance.
(i) NEWCO shall take out and maintain, at its own expense, during
the term of this Agreement, and for a minimum of two (2) years following the
expiration, termination or cancellation of this Agreement, product liability
coverage from an insurance company or companies reasonably satisfactory to
ILEX. During the clinical development of Products, such coverage shall be at
least [**] per occurrence. Promptly upon commercial introduction of the
initial Product, the parties shall negotiate in good faith an increase in such
coverage. The insurance policy relating to such coverage shall name ILEX, B.W.
Co., and WFL as additional insureds by way of endorsement or otherwise as their
respective interests may appear.
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(ii) Within thirty (30) days after the Effective Date, NEWCO shall
cause to be delivered to ILEX an insurance certificate evidencing the insurance
coverage required by Subsection 12.3(i). Such insurance certificate shall name
ILEX, B.W. Co., and WFL as additional insureds as their respective interests
may appear.
ARTICLE 13. CONFIDENTIALITY
13.1 Treatment of Confidential Information. Except as otherwise
provided in this Article 13, during the term of this Agreement and for a period
of five (5) years thereafter:
(i) NEWCO will retain in confidence and use only for purposes of
this Agreement any information and data supplied by or on behalf of ILEX to
NEWCO under this Agreement; and
(ii) ILEX will retain in confidence and use only for purposes of
this Agreement any information and data supplied by or on behalf of NEWCO to
ILEX under this Agreement.
For purposes of this Agreement, all such information and data which a
Party is obligated to retain in confidence shall be called "Information."
13.2 Right to Disclose. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under this
Agreement or any rights which survive termination or expiration hereof, a party
may disclose Information to its Affiliates, sublicensees (actual and
prospective), investors (actual and prospective), consultants, outside
contractors and clinical investigators on condition that such entities or
persons agree (i) to keep the Information confidential for at least the same
time periods and to the same extent as each party is required to keep the
Information confidential and (ii) to use the Information only for such purposes
as such party is entitled to use the Information. Each party or its Affiliates
or, if applicable, its sublicensees may disclose such Information to government
or other regulatory authorities to the extent that such disclosure (a) is
reasonably necessary to obtain patents or authorizations, to conduct clinical
trials and to market commercially the Product, provided such party is otherwise
entitled to engage in such activities under this Agreement or (b) is otherwise
required by applicable laws or regulations. To the extent reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under the B.W.
Agreement or any rights that survive termination or expiration thereof, ILEX
may disclose information to B.W. Co. or WFL, under terms set forth in Sections
12.1-12.5 of the B.W. Agreement.
13.3 Release From Restrictions. The obligation not to disclose
Information shall not apply to any part of such Information that (i) is or
becomes patented, published or otherwise part of the public domain other than
by acts of the party obligated not to disclose such Information (for purposes
of this Article 13, the "receiving party") or its Affiliates or sublicensees in
contravention of this Agreement; (ii) is disclosed to the receiving party or
its Affiliates or sublicensees by a Third Party, provided such Information was
not obtained by such Third Party directly or indirectly
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from the other party under this Agreement; (iii) prior to disclosure under this
Agreement, was already in the possession of the receiving party or its
Affiliates or sublicensees, provided such Information was not obtained,
directly or indirectly, from the other party under this Agreement or under an
obligation of confidence; (iv) results from research and development by the
receiving party or its Affiliates or sublicensees independent of disclosures
from the other party under this Agreement; (v) has been approved for
publication by the parties hereto; or (vi) is Product-related information which
is reasonably required to be disclosed in connection with the marketing of the
Product.
13.4 Confidentiality of Agreement. Except as otherwise required by
law or applicable regulation or the terms of this Agreement or otherwise
mutually agreed upon by the hereto, each party shall treat as confidential the
terms, conditions and existence of this Agreement. Notwithstanding the
foregoing, a party may disclose such terms, conditions and existence to an
Affiliate or, in the case of NEWCO, a sublicensee, which agrees to be bound by
the terms of this Section 13.4 to the same extent as such party.
13.5 Right to Publication. NEWCO agrees that ILEX shall have the
right to publish or to present publicly (collectively, a "Publication") the
results of any research, work or other development performed pursuant to this
Agreement by or on behalf of ILEX (collectively, the "Results"). ILEX agrees
to submit any proposed Publication to NEWCO for its review at least thirty (30)
days prior to submission or presentation of such Publication. If NEWCO
requests a delay in submission or presentation based on patent considerations,
NEWCO agrees to delay such submission or presentation for a period not to
exceed ninety (90) days from the date of such request. ILEX further agrees to
give due consideration to any comments made by NEWCO with respect to such
Publication but, except as set forth in the immediately following sentence,
ILEX shall determine the content of the Publication.
ARTICLE 14. TERM; TERMINATION
14.1 Term; Termination. Unless terminated sooner pursuant to
Section 14.3 this Agreement shall become effective as of the Effective Date and
shall continue in full force and effect until the expiration of the later of
ILEX's obligation to pay royalties under the B.W. Agreement or NEWCO's
obligation to pay royalties hereunder; at which time, notwithstanding anything
to the contrary contained herein, all rights licensed to NEWCO herein shall be
deemed to be converted to a fully paid, non-exclusive, irrevocable, royalty
free license of the Technology in the Territory to use, sell and have sold
Products incorporating, utilizing or otherwise commercially exploiting the
Technology in the Field. Upon expiration or termination of this Agreement with
respect to one or more countries of the Territory, the rights and obligations
of the parties with respect to such country or countries shall cease, except as
follows:
(i) the rights and obligations of the parties under Article 12
shall survive termination or expiration;
-13-
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(ii) upon expiration or termination for any reason, the obligations
of confidentiality and use of Information under Article 13 shall survive for
the period provided therein;
(iii) upon termination, NEWCO's obligations under Sections 14.3,
14.4 and 14.5 shall survive; and
(iv) expiration or termination of this Agreement shall not relieve
the parties of any other obligation accruing prior to such termination.
14.2 Paragraph 13.2 of the B.W. Agreement. ILEX agrees not to
exercise its rights under Section 13.2 of the B.W. Agreement unless (i) NEWCO
is in breach of this Agreement or (ii) ILEX and NEWCO agree to do so.
14.3 Termination For Cause.
(i) ILEX may terminate this Agreement in the U.S. and/or in the
Non-U.S. Territory upon the occurrence of any of the following:
(a) upon or after the bankruptcy, insolvency,
dissolution or winding up of NEWCO (other than dissolution or
winding up for the purposes of reconstruction or
amalgamation);
(b) upon or after the breach of any material
provision of this Agreement by NEWCO if such breach is not
cured within twenty (20) days after ILEX gives NEWCO written
notice thereof, it being understood that if such breach
relates solely to NEWCO's obligations in the U.S., then this
Agreement may be terminated only as to the U.S.; and, if such
breach relates solely to NEWCO's obligations in the Non-U.S.
Territory, then this Agreement may be terminated only as to
the Non-U.S. Territory;
(c) upon the abandonment by NEWCO of the
development of the Products. As used in this clause (c), the
term "abandonment," in respect of development of the
Products, shall mean that NEWCO or its sublicensees have
failed for a period of five (5) or more consecutive months to
conduct any development, testing, regulatory or manufacturing
activity reasonably necessary in order to prepare and file
such Registration for such Product in the U.S., unless such
failure was due to (x) reasons beyond its or their control
(such as circumstances of the type described in Article 21
hereof) or (y) the failure by ILEX to perform its obligations
hereunder. NEWCO shall give ILEX prompt written notice of
the abandonment of the development of the Products; or
(d) upon the termination of the B.W. Agreement,
in whole or in part, by either B.W. Co. or WFL, it being
understood that if the B.W. Agreement termination relates
solely to ILEX's License Rights in the U.S., then this
Agreement may be terminated only as to the U.S.; and, if such
-14-
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termination relates solely to ILEX's License Rights in the
Non-U.S. Territory, then this Agreement may be terminated only
as to the Non-U.S. Territory;
(ii) NEWCO may terminate this Agreement upon the occurrence of any
of the following:
(a) the bankruptcy, insolvency, dissolution or
winding up of ILEX (other than dissolution or winding up for
the purposes of reconstruction or amalgamation);
(b) the breach of any material provision of this
Agreement by ILEX if such breach is not cured within sixty
(60) days after NEWCO gives ILEX written notice thereof;
(c) the NEWCO Board of Managers determines that the
Compound is not approvable for any indications in the Field.
14.4 NEWCO's Obligations Upon Termination. Upon termination (but
not expiration) of this Agreement for any reason, (i) NEWCO shall promptly pay
to ILEX any amounts due under the terms of this Agreement including License
Fees and Royalty Fees which have accrued as of the date of termination (ii)
NEWCO agrees to cooperate fully with ILEX or its respective nominee, to
transfer or to hand over to ILEX or its respective nominee, health
registrations and sales registrations regarding the Products in the country or
countries in which termination has occurred and (iii) in the event of
termination with respect to all countries of the Territory, NEWCO shall return
to ILEX all copies of the Information supplied by either hereunder, except that
NEWCO's legal department may retain one copy of the Information for purposes of
determining the scope of its obligations hereunder, and all rights that ILEX
granted NEWCO hereunder shall revert back to ILEX and NEWCO shall grant ILEX a
nonexclusive royalty free license in any improvements to the Know-How or Patent
Rights, including but not limited to any trade secret, patentable improvement
or patent rights.
14.5 Disposition of Product. Upon termination of this Agreement
with respect to all countries of the Territory, NEWCO shall provide ILEX with a
written inventory of all the Products (in the form of raw materials, work-in-
process and finished goods) in its and its sublicensees' possession and shall
have the right to dispose of such Products within six (6) months thereafter,
subject to fulfillment of its royalty obligations relating thereto.
Notwithstanding the foregoing, upon termination of this Agreement in all
countries of the Territory, NEWCO shall promptly return or destroy, at ILEX's
election, any materials supplied by ILEX pursuant to Article 15.
-15-
16
14.6 Sublicensees Upon Termination. If any party terminates the
Agreement and sublicensees are not then in default under the terms of their
sublicensee agreements hereunder, ILEX shall have the right (but not the
obligation) to assume and continue such sublicense agreements with payments
thereunder being made by the sublicensees directly to ILEX, as the case may be,
without any further obligations on the part of NEWCO with respect thereto.
ARTICLE 15. TRANSFER TO NEWCO
Within the twenty (20) day period following the Effective Date, ILEX
shall make available to NEWCO all of the Technology, and ILEX shall assign to
NEWCO IND 30,692 for the Compound. NEWCO shall acknowledge acceptance of such
assignment to the FDA promptly after it is made by ILEX. Within the twenty
(20) day period following effective date, ILEX shall transfer legal title to
formulated Compound delivered by B.W. Co. pursuant to Article 14.2 of the B.W.
Agreement. ILEX shall supply the formulated Compound "AS IS" and subject to
the limitations of Sections 14.2 and 14.3 of the B.W. Agreement.
ARTICLE 16. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by NEWCO
without the written consent of ILEX; provided, however, that NEWCO may, without
such consent, assign this Agreement in connection with the transfer or sale of
all or substantially all of its business related to the Products or in the
event of its merger or consolidation with another company. Any purported
assignment in violation of the preceding sentence shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. No
assignment shall relieve NEWCO of responsibility for the performance of any
accrued obligation which NEWCO then has hereunder.
ARTICLE 17. PATENT MARKING
NEWCO agrees to ▇▇▇▇ all Products made, used or sold under the terms
of this Agreement, or their containers, in accordance with applicable patent
marking laws.
ARTICLE 18. REGISTRATION OF LICENSES
NEWCO agrees to register or give required notice concerning this
Agreement, through itself or through a sublicensee, in each country of the
Territory where there exists a Valid Claim and an obligation under law to so
register or give notice, to pay all costs and legal fees connected therewith
and shall otherwise comply with all national laws applicable to this Agreement.
-16-
17
ARTICLE 19. PATENT TERM EXTENSION
NEWCO hereby agrees to cooperate fully with ILEX and its Affiliates in
obtaining an extension of the term of any patent included within the Patent
Rights under the applicable laws of any country including, but not limited to,
the Drug Price Competition and Patent Term Restoration Act of 1984. NEWCO
agrees to execute such documents and to take such additional actions as ILEX or
any of its Affiliates may reasonably request in connection therewith. NEWCO
further agrees promptly (and in any event within seven (7) days) to provide
ILEX with a copy of each product registration certificate, via facsimile, which
NEWCO receives in respect of a Product in any country for purposes of ILEX
seeking such an extension.
ARTICLE 20. B.W. AGREEMENT
Each of the parties agrees to abide by and comply with the terms of
the B.W. Agreement. Any terms of this Agreement that are inconsistent with the
B.W. Agreement or that would be interpreted as a breach by ILEX of the B.W.
Agreement shall be interpreted to comply with the B.W. Agreement.
ARTICLE 21. FORCE MAJEURE
A party shall not be held liable or responsible to another party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement, other than an
obligation to make a payment, when such failure or delay is caused by or
results from fires, floods, embargoes, government regulations, prohibitions or
interventions, wars, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
ARTICLE 22. SEVERABILITY
Each party hereby expressly agrees and contracts that it is not the
intention of any party to violate any public policy, statutory or common laws,
rules, regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries; that if
any word, sentence, paragraph, clause or combination thereof in this Agreement
is found by a court or executive body with judicial powers having jurisdiction
over this Agreement or any of the parties hereto in a final unappealed order,
to be in violation of any such provisions in any country or community or
association of countries, such words, sentences, paragraphs, clauses or
combination shall be inoperative in such country or community or association of
countries and the remainder of this Agreement shall remain binding upon the
parties hereto.
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ARTICLE 23. NOTICES
Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been properly given if delivered in person,
or if mailed by registered or certified mail (return receipt requested),
postage prepaid, or by facsimile (and promptly confirmed by such registered or
certified mail), to the addresses given below or such other addresses as may be
designated in writing by the parties from time to time during the term of this
Agreement. Any notice sent by registered or certified mail as aforesaid shall
be deemed to have been given when mailed.
In the case of ILEX:
ILEX Oncology Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of NEWCO:
MPILEX Partners, L.P
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and with a copy to:
MPI Development, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. R. ▇▇▇▇▇▇▇▇, M.D., Ph.D.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ Attorneys, P.C.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The Kalamazoo Building, Suite 402
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE 24. GOVERNING LAW AND ARBITRATION
24.1 Governing Law. This Agreement is to be read and construed in
accordance with and be governed by laws of the State of Texas, exclusive of its
choice of law rules. Each party hereby irrevocably submits to jurisdiction in
the courts of the State of Texas for any dispute that arises under this
Agreement. The parties hereby exclude the application of The Convention for
the International Sale of Goods.
24.2 Alternative Dispute Resolution. All claims, disputes,
controversies and other matters in question arising out of or relating to this
Agreement shall be settled in accordance with the provisions of Appendix III
attached hereto, and judgment may be entered upon the arbitration award in any
court having jurisdiction thereof.
ARTICLE 25. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. The parties hereto may alter any of the
provisions of this Agreement, but only by a written instrument duly executed by
both parties hereto. B.W. Co. and ILEX agree that the Letter Agreement is
hereby terminated.
ARTICLE 26.
COMPLIANCE WITH UNITED STATES OF AMERICA AND FOREIGN LAWS AND STANDARDS
26.1 Marketing Regulations. Each party shall be responsible for
complying with all FDA rules regulations and requirements and with all FDA
equivalent laws, rules, requirements and regulations in the countries outside
the United States covering the marketing and sale of Product.
26.2 Manufacturing Regulations. Each party shall be responsible
for complying with all FDA rules regulations and requirements and with all FDA
equivalent laws, rules, requirements and regulations in the countries outside
the United States covering the manufacture of Product.
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26.3 Export Laws. Each party shall be responsible for compliance
with all laws, rules and regulations covering the exportation or importation of
Product.
26.4 Foreign Corrupt Practices Act.
(i) Agreement. Each party agrees that neither it nor any
of its employees or agents will, directly or indirectly, in connection
with the solicitation of sales or sales of Products to customers:
(a) make any payment to any officer or employee
of any government, or to any political party or official
thereof, where such payment either (1) is unlawful under laws
applicable thereto, or (2) would be unlawful under the Foreign
Corrupt Practices Act of 1977, as amended (the "Act"), of the
United States of America;
(b) make any payment to any person, if such
payment constitutes an illegal bribe, illegal kickback or
other illegal payment under laws applicable thereto; or
(c) commit, directly or indirectly, any other act
or omission in violation of any applicable law, regulation,
rule or custom having the effect of law.
(ii) No Authorization. Neither party nor any of a party's
employees is authorized under this Agreement to engage in any of the
activities described in Section 26.4(i), and each party agrees that no
such activity will be in furtherance of its relationship with the
other party or of the business of the other party. Each party affirms
that neither it nor any of its employees or agents is an official or
an employee of any government.
(iii) Indemnification. In the event a party or its
employees engage in any of the activities described in Section
26.4(i), and if such activities result in any judicial, quasi-judicial
or administrative proceedings involving the other party, or its
employees or agents, the party engaging in such activities will
indemnify the other party and such employees or agents of the other
party, for all expenses, including, but not limited to, attorneys'
fees and expenses of investigation, incurred in the course of such
proceedings.
(iv) Reporting. Each party agrees to report to the other
party any solicitation to engage in any activity described in Section
26.4(i) as soon as possible after it becomes aware of such
solicitation, but in no event more than ten calendar days thereafter.
Each party agrees further to provide all information concerning such
solicitation which the other party may reasonably request.
26.5 Local Law. Each party shall be responsible for compliance
with all local, state, federal and foreign governmental laws, rules,
regulations and requirements for the marketing, sale or other transfer of
Product.
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ARTICLE 27. WAIVER
The failure of a party to enforce at any time for any period any of
the provisions hereof shall not be construed as a waiver of such provisions or
of the rights of such party thereafter to enforce each such provision.
ARTICLE 28. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same document.
ARTICLE 29. CAPTIONS
The captions to the several Articles and Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Articles and Sections hereof.
[Signatures on next page.]
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IN WITNESS WHEREOF, the parties have executed this License Agreement
as of the Effective Date.
ILEX ONCOLOGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Love
-----------------------------------------
▇▇▇▇▇▇▇ ▇. Love, President
MPILEX PARTNERS, L.P.
By: MPILEX Management, L.L.C.
By: /s/ J. R. ▇▇▇▇▇▇▇▇
--------------------------------
J. R. ▇▇▇▇▇▇▇▇, M.D., Ph.D.,
Vice President
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APPENDIX I
B.W. Agreement to be set forth herein.
AI-1
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APPENDIX II
Piritrexim isethionate or
2,4-Diamino-6(2,5-dimethoxybenzyl)-5-methylpyrido-(2,3- d)pyrimidine:
has a molecular weight of: 451.50
and the formula: C17H19N5O2oC2H6O4S
AII-1
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APPENDIX III
ALTERNATIVE DISPUTE RESOLUTION
All disputes between the Parties relating to this Agreement shall be
settled by the following procedures:
1. NEGOTIATION
1.1 Within thirty (30) days of the incurred acts,
occurrences and/or omissions giving rise to the dispute, the aggrieved party
shall give detailed written notice to the other party of the aggrieved party's
specific complaint including the amount of actual damages and expenses,
including attorneys' fees, claimed or incurred by the aggrieved party. The
aggrieved party shall include copies of all documents which support its claims.
1.2 Within thirty (30) days after receipt of the notice,
the party receiving the notice shall tender to the other party a written
response, including an offer of settlement, if appropriate. Any offer of
settlement not accepted with thirty (30) days of receipt by the aggrieved party
shall be deemed to have been rejected.
1.3 The tender of an offer of settlement is not an
admission of engaging in an unlawful act or practice or of liability.
1.4 In the event the parties are unable to settle their
disputes after following the procedures set forth above, with fifteen (15) days
thereafter, the parties shall submit their disputes to mediation.
2. MEDIATION
2.1 Consent to Mediator. Both parties shall share
equally in the naming of the mediator. The mediator shall act as an advocate
for resolution and shall use his or her best efforts to assist the parties in
reaching a mutually acceptable settlement.
2.2 Conditions Precedent to Serving as Mediator. The
mediator shall not serve as a mediator in any dispute in which he or she has
any financial or personal interest in the result of the mediation. Prior to
accepting an appointment, the mediator shall disclose any circumstance likely
to create a presumption of bias or prevent a prompt meeting with the parties.
In the event that the parties disagree as to whether the mediator shall serve,
the mediator shall not serve.
2.3 Authority of Mediator. The mediator does not have
the authority to decide any issue for the parties, but will attempt to
facilitate the voluntary resolution of the dispute by the parties. The
mediator is authorized to conduct joint and separate meetings with the parties
and to offer suggestions to assist the parties in achieving settlement. If
necessary, the mediator may also obtain expert advice concerning technical
aspects of the
AIII-1
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dispute, provided that the parties agree and assume the expenses of obtaining
such advice. Arrangements for obtaining such advice shall be made by the
mediator or the parties, as the mediator shall determine. Likewise, the
mediator may request the limited production of documents from both parties in
defense of their respective claims. The mediator shall not disclose the
parties in defense of their respective claims. The mediator shall not disclose
the actual documents without the consent of the offering party. However, in
his or her discussions with the respective parties, the mediator will be
permitted to share summary oral information from any such documents.
2.4 Length of Mediation. Mediation proceedings shall not
extend beyond two (2) days, without the consent of the parties.
2.5 Commitment to Participate in Good Faith. The parties
further agree that at any time following the mediation process but prior to the
initiation of binding arbitration, the president or highest ranking senior
level executive of the respective companies shall meet or confer telephonically
in one last effort to resolve the dispute. During each phase of the
alternative dispute evaluation process, the parties agree to act in good faith
to settle the dispute, if possible.
3. ARBITRATION.
3.1 All claims, disputes, controversies and other matters
in question arising out of or relating to the Agreement or to the alleged
breach thereof shall be settled by Negotiation between the parties as described
in Section 1 of this Appendix III or by Mediation between the parties as
described in Section 2 of this Appendix III. If such negotiation and mediation
are unsuccessful, the parties agree to submit to binding arbitration. The
parties agree the arbitration shall be administered by the American Arbitration
Association ("AAA") and conducted in accordance with its Commercial Arbitration
Rules, except as otherwise provided in accordance with procedures set forth in
Sections 3.2 through 3.3 (xiii) of this Appendix III or as the parties may
otherwise agree.
3.2 Notice. Notice of demand for binding arbitration
shall be given in writing to the other party pursuant to the Agreement.
3.3 Binding Arbitration. Upon filing of a notice of
demand for binding arbitration by either party, arbitration shall be commenced
and conducted as follows:
(i) Arbitrator. All claims, disputes,
controversies, and other matters (collectively "matters") in question shall be
referred to and decided and settled by an arbitrator that has been found
acceptable by both Licensor and Licensee. Selection of the arbitrator shall be
made within ten (10) business days after the date of filing of a demand for
arbitration. In the event the parties cannot agree on the selection of the
arbitrator within ten (10) business days of delivery of the written notice
invoking arbitration, the arbitrator shall be selected pursuant to the AAA
Commercial Arbitration Rules.
(ii) Cost of Arbitration. The cost of arbitration
proceedings, including without limitation the arbitrator's compensation and
expenses, hearing room
▇▇▇▇-▇
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ reporter transcript charges etc., shall be borne by the parties
equally or otherwise as the arbitrator may determine. The arbitrator may award
the prevailing party its reasonable attorneys' fees and costs incurred in
connection with the arbitration. The arbitrator is specifically instructed to
award attorneys' fees for instances of abuse in the discovery process.
(iii) Location of Proceedings. The arbitration
proceedings shall be held in San Antonio, Texas, unless the parties agree
otherwise.
(iv) Pre-hearing Discovery. The parties shall
have the right to conduct and enforce pre- hearing discovery in accordance with
the then current Federal Rules of Civil Procedure, subject to these
limitations:
(a) Each party may serve no more than one set of
interrogatories limited to fifty items;
(b) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus
two fact witnesses without regard to whether they will be
called to testify (each party will be entitled to a total of
nor more than 24 hours of depositions of the other party's
witnesses), provided however, that the arbitrator may provide
for additional depositions upon showing of good cause; and
(c) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrator.
(v) Discovery disputes. All discovery disputes
shall be decided by the arbitrator. The arbitrator is empowered;
(a) to issue subpoenas to compel pre-hearing
document or deposition discovery;
(b) to enforce the discovery rights and obligations
of the parties; and
(c) to otherwise control the scheduling and conduct
of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrator
shall have the power and authority to, and to the fullest extent practicable
shall, abbreviate arbitration discovery in a manner which is fair to all
parties in order to expedite the conclusion of each alternative dispute
resolution proceeding.
(vi) Pre-hearing Conference. Within fifteen (15)
days after selection of the arbitrator or as soon thereafter as is mutually
convenient to the arbitrator, the arbitrator shall hold a pre-hearing
conference to establish schedules for completion of discovery, for exchange of
exhibit and witness lists, for arbitration briefs, for the hearing, and to
decide procedural matters and all other questions that may be presented.
(vii) Hearing Procedures. The hearing shall be
conducted to preserve its privacy and to allow reasonable procedural due
process. Rules of evidence need not be strictly followed, and the hearing
shall be streamlined as follows:
(a) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
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(b) Expert reports, witness biographies,
depositions, and affidavits may be utilized, subject to the
opponent's right of a live cross-examination of the witness in
person;
(c) Charts, graphs, and summaries shall be utilized
to present voluminous data, provided (i) that the underlying
data was made available to the opposing party thirty (30) days
prior to the hearing, and (ii) that the preparer of each
chart, graph, or summary is available for explanation and live
cross-examination in person;
(d) The hearing should be held on consecutive
business days without interruption to the maximum extent
practicable; and
(e) The arbitrator shall establish all other
procedural rules for the conduct of the arbitration in
accordance with the rules of arbitration of the Center for
Public Resources.
(viii) Governing Law. This arbitration provision
shall be governed by, and all rights and obligations specifically enforceable
under and pursuant to, the Federal Arbitration Act (9 U.S.C. Section 1, et
seq.). All disputes under this Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware. No conflict-of-laws rule or
law that might refer such construction or interpretation to the laws of another
jurisdiction shall be considered.
(ix) Consolidation. No arbitration shall include,
by consolidation, joinder, or in any other manner, any additional person not a
party to the Agreement, except by written consent of both parties containing a
specific reference to this Agreement.
(x) Award. The arbitrator is empowered to render
an award of general compensatory damages and equitable relief (including,
without limitations, injunctive relief), but is not empowered to award
exemplary, special or punitive damages. The award rendered by the arbitrator
(1) shall be final; (2) shall not constitute a basis for collateral estoppel as
to any issue; and (3) shall not be subject to vacation or modification.
(xi) Waiver of Any Right to Punitive or Exemplary
Damages. All persons subject to the Agreement expressly agree to WAIVE ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES of any kind, whether this right
or claim could accrue NOW OR IN THE FUTURE under applicable law. However, in
the event a court determines that the express waiver set forth in Section 3(xi)
of this Appendix III is unenforceable, then the arbitrator, and not a court,
shall determine if punitive or exemplary damages should be awarded and, if
awarded, the amount thereof.
(xii) Confidentiality. The parties hereto will
maintain the substance of any proceedings hereunder in confidence and the
arbitrator, prior to any proceedings hereunder, will sign an agreement whereby
the arbitrator agrees to keep the substance of any proceedings hereunder in
confidence.
(xiii) Severability. In the event any court or
other tribunal concludes any portion of this Appendix III to be void or
otherwise unenforceable for any reason, the
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remainder of this Appendix III shall survive and is deemed severable, such that
the parties' express purpose to arbitrate any unresolved Controversy shall be
recognized and given effect.
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